May 29, 2009 13:07 ET

Canada Post Responds to Allegations of Inappropriate Awarding of Contract

OTTAWA, ONTARIO--(Marketwire - May 29, 2009) - Canada Post categorically rejects allegations that our contract with Purolator Courier Ltd. for movement of mail by air in Canada was awarded inappropriately. This contract was negotiated in accordance with our commercial mandate and all applicable rules, laws and regulations, including those contained in the North American Free Trade Agreement. The due diligence process also incorporated the transfer pricing practice which applies to commercial arrangements amongst the Canada Post Group of Companies. The transaction was approved by the Canada Post Board of Directors, each of whom is appointed directly by the Government of Canada.

When Air Canada gave the corporation 120-days notice that they were terminating the Domestic and International agreements to carry mail, Canada Post was forced to move quickly to ensure that mail would continue to be delivered.

Purolator Courier Limited is a member of the Canada Post Group of Companies and has been a reliable supplier to Canada Post since 1993. Rather than simply awarding a contract to a subsidiary, Canada Post engaged in a Request for Information (RFI) to investigate whether other solutions were feasible in the timeframe required. The RFI was sent to four qualified air cargo suppliers. The result of the RFI was that Purolator Courier Ltd was the only carrier that could handle the volume required in the restricted timeframe the corporation was forced in to.

The new arrangement has enabled Canada Post to fly the majority of mail on a schedule independent of commercial airlines. This has made the movement of mail more efficient. Canada Post's overall costs to move domestic mail by air are now less than what they would have been with Air Canada.

Canada Post understands that this is a very difficult time for the air cargo industry. When the Request for Information was conducted in the spring of 2008, the air cargo industry was in a very different place economically. The change in fortune does not justify any attempt to smear our reputation.

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